Backers of Tribune buyout pressure FCC to deregulate

by DAVID ROEDER,Chicago Sun-Times

The reporters who work for Tribune Co. are used to making deadlines, but now the executives are getting tense over a deadline of their own.

Time is growing short for the Federal Communications Commission to declare that Tribune can continue to own newspapers and broadcast stations in the same city. Without the declaration soon, real estate titan Sam Zell's planned $8.2 billion buyout of Tribune stockholders at $34 per share gets riskier to finance and could collapse.

Zell wants to close the deal by year-end. But Tribune executives have said that to meet that timeline, they need a decision from the FCC by mid-November. The rest of the time is needed for investment bankers to complete paperwork for Tribune's switch to a private company mostly owned by its employees.

FCC Chairman Kevin Martin, part of a 3-2 Republican majority that runs the agency, is on record favoring looser restrictions on media ownership for Tribune and other conglomerates. But he has said he doesn't want to vote on a Tribune-specific exemption, preferring instead to bring a more general easing before the commission on Dec. 18.

Tribune executives like his intent, but are privately irritated at his scheduling and strategy. "He's playing a high-stakes poker game, but all his chips are the Tribune's," a source said.

Martin's tactics have generated opposition in Congress, with some of the criticism coming from presidential hopeful Sen. Barack Obama (D-Ill.). Obama joined eight other senators Thursday in co-sponsoring a bill to halt what they called Martin's "fast march" toward easing media ownership rules. The lead sponsors of the measure are Sens. Byron Dorgan (D-N.D.) and Trent Lott (R-Miss.). The bill requires the FCC to open a 90-day public comment period for any change in media ownership rules.

A concern that has united liberals and conservatives on Capitol Hill is whether media consolidation is snuffing out local programming and competition in news coverage.

Martin could change tactics and push a continued exemption for the Tribune to the restrictions on same-city media ownership. Tribune can own the Chicago Tribune and WGN-TV and radio in Chicago under rights that pre-date FCC restrictions, but critics contend those exemptions should die because the Zell deal makes it a different company.

An FCC spokeswoman declined to comment. An assistant to Zell said he was out of the country and could not be reached.

Despite the $34 a share buyout price, Wall Street has been dubious. Tribune shares shed 36 cents Thursday to close at $27.50, their lowest point since Oct. 22, indicating investors don't believe the deal will close as planned.

At the least, the failure to close the sale by year-end increases costs for the highly leveraged deal. FCC inaction could give the deal's four investment banks a basis for withdrawing a $4.2 billion financing commitment.

Two of the banks, Citigroup and Merrill Lynch, already have changed their top executives and written off billions of dollars in lost investments for packages of risky mortgages. The other banks are JPMorgan Chase and Bank of America.

article originally published at http://www.suntimes.com/business/643011,CST-FIN-trib09.article.

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